When a 100-year-old bank firmly ensconced in a 60-year-old nation sets up 'hot cool spots', it is time to realise that age is not only relative, it is largely irrelevant. You are as old as you feel, and the centenarian Indian banking industry is not feeling old, infirm and complaining of hip aches. In contrast, it is young, hip, and really speaking, quite 'with it'.
Youth, of course, is the mantra of young India and Bank of Baroda (BoB), which turned 100 this year, is firmly breaking out of its wrinkles and moving sprightly to catch up with the nation.
Yesterday. Although banking is a century-old in India, real banking emerged post-freedom. The first inflection point came in 1969, when banks were nationalised. Banking was connected at that time to the two faces of India—one, the rural and impoverished, and the other, urban, traditionally the business class. Banking focused on intensive rural development and banks were used as economic instruments of change. Nationalisation resulted in an explosive growth of banks—we have over 65,000 bank branches in the country now, from 8,268 in 1969. The second point of change was in 1991, when liberalisation began changing the face of our country. Private banks came in and brought the notions of customer service, technology and convenience. In 1993, new accounting norms were introduced in banks and in tandem with international practices, things like capital adequacy and reporting net NPAs became mandatory. The sluggish public sector nationalised banks were forced to pull up their socks.
Chairman & MD,
Bank of Baroda
“The young choose private or foreign banks, while their fathers and uncles bank with us. Youth are our target now.”
Today. Indian banking is once again in the throes of change. This time the challenge is on being more than a money vault. Embracing technology is key now, and banks are moving towards being financial supermarkets— one-stop shops for all your money needs.
Close your eyes and think of the bank you went to 60 years ago—you would have seen a dusty office, desultory staff, long queues and hand-written pass books. Today, if you are an involved bank customer, you see granite floors, courteous and efficient help-desks, computerised terminals and transactions that are effected in seconds. Or, if you are a casual one, you see ATM vestibules that bring your bank to your fingertips, or your computer screen that brings your bank home. In its 100th year, BoB is determined to break out of the first visual and move into the second.
% of BoB SERVICES on NET 85% h
1 Core banking solutions in over 80 per cent BoB branches
2 BoB has a state-of-the-art Global Data Centre in Mumbai for running its centralised banking solutions and other applications in 1900+ branches across India and 20 other countries
It is startling how similar the problems and peculiarities of a resurgent India and BoB are. Even as the nation tries to pull its rural and urban population together in its 9 per cent growth, BoB is trying to tap into the affluent yuppy customer base, while not losing focus of its responsibility towards development banking.
Says Anil Khandelwal, chairman and managing director, BoB, “We have the fathers and the uncles of the youth banking with us, while the young choose private or foreign banks. We are now targeting the youth of India. Even so, public sector banks serve both the faces of India, and we cannot ignore one for the other. So our focus on our traditional customer base continues.”
To bridge the generation gap between the 100-year-old bank and the new millennium young Indian, BoB is setting up 'hot cool spots', gen-next branches that more than just effect monetary transactions. The first gen-next branch, operational in Pune, mixes a casual look with utility. It is adorned with bean bags and LCD televisions, and has a career counselling cell, a library and Internet browsing facilities. In a corner is the bank per se. There are plans to open six more 'hot cool spots' across the country this year.
A big change in banking practices is the focus on customer convenience. While some banks are better than others at this, what is undisputed is that old banking attitudes need to change. “I have always felt that banking in India was for employee convenience, not for customer convenience,” says Khandelwal. “Employees want to start work at 10 am, so banks started at 10 am; employees want Sundays off, so banks in India were shut on Sundays, even though the whole world was banking round the clock. The first thing we did was to extend banking hours. In four months, we started 12-hour banking in over 500 branches. We then extended this and started 24-hour human banking. I say human banking because by putting an ATM, private and multinational banks say they have made 24-hour banking available, but that's faking it. Today, I have nine branches where employees work round the clock—you can get a draft at 1 am, deposit cash at 3 am. We were the first public sector bank to undertake these initiatives, and they have worked very well.”
Tomorrow. The future of banking in India is not just about banks staying open till customers want them to, it is also about offering everything a customer wants under one roof. In many ways, this future is already here—most private sector banks do offer many value-added services to their customers. But scale is paramount in India and the impact of this kind of banking will be felt only when the public sector behemoths roll out these services.
Not wanting to be left out of the race, BoB's objective this year is to change from vanilla banking to multi-specialist banking. It has signed a memorandum of understanding (MoU) with the Italian group Pioneer for setting up an asset management company, to which its dwindling mutual fund would be attached. On the insurance side, it has signed an MoU with Legal and General of the UK and is expected to make its products available by next year. The bank would also put in place a wealth management team that would advise clients on their portfolios. This multi-specialist model, Khandelwal says, is the certain future of banking in India.
A test awaits Indian banks, especially those in the public sector. In 2009, foreign banks will be allowed direct entry in India, either through subsidiaries or opening of branches here. The rule of the game will be simple: offer better products and more convenient services or perish.
Over the years, Indian banks have taken tentative steps off the shores of the country but none of them have had a clear plan of how to conquer the globe. BoB itself is an early starter in the foreign branch game— it set up its first foreign office in 1953. Earlier this year, the bank celebrated 50 years of its UK operations. Says Khandelwal, “We have the highest number of branches abroad among Indian banks. We are opening 10 foreign offices this year—a never before in Indian banking history.” The bright orange rising sun logo of BoB will reach diverse locations across the globe this year—from Port of Spain to Bahrain, from Canada to New Zealand.
The future not only promises us freedom from the hassles that “bank work” implied, but also anytime, anywhere, and any kind of banking. As India takes on the world, our banks match the pace.;